Mentor Lumber & Supply Co. v. Victor

8 Ohio App. Unrep. 640
CourtOhio Court of Appeals
DecidedDecember 31, 1990
DocketCase No. 89-L-14-103
StatusPublished

This text of 8 Ohio App. Unrep. 640 (Mentor Lumber & Supply Co. v. Victor) is published on Counsel Stack Legal Research, covering Ohio Court of Appeals primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Mentor Lumber & Supply Co. v. Victor, 8 Ohio App. Unrep. 640 (Ohio Ct. App. 1990).

Opinion

CHRISTLEY, P.J.

In December 1985, appellant's son, Reed Victor, opened an account with appellee, Mentor Lumber and Supply Co., and operated a sole proprietorship d.b.a. Johnnycake Homes. In 1986, appellant, Ralph Victor, and his son incorporated under the name Reed Victor, Inc., d.b.a. Johnnycake Homes. (Appellant testified that the incorporation was a result of his son experiencing marital problems.) Reed Victor, Inc. was formed with Ralph Victor being a fifty percent shareholder, a director, an officer and an authorized signatory on the corporate checking account. The shares were returned to appellant 's son in 1987 with no consideration passing to appellant. (The marital problems have been resolved.) A number of construction loans were obtained by appel-lant's son through Security Federal Savings and Loan Association, with appellant as cosignor. Appellant also loaned his son's corporation $200,000. The loan was secured by two lots on which model homes were built.

In October 1987, appellee called a meeting with appellant and his son concerning the corporation's outstanding balance due on its account with appellee. (There was a large amount owed and Reed Victor's check for the October payment [$10,000] was returned due to "non-sufficient funds.") Another meeting was held in November 1987, and a representative of appellee, Robert Sanderson, testified that appellant agreed to "stand behind" his son's account. Finally, at a meeting held on February 6, 1988, appellee required the account to be brought up to date, otherwise deliveries of materials would cease. The possibility of mechanic's liens were also discussed. At the end of the meeting, appellant made a payment on the account in the amount of $32,953.62. Evidence was presented that the corporation was indebted to appellant for $178,000 at the time of the November 1987 meeting and remained indebted for $67,000 at the time of the February 1988 meeting. At this time, appellant no longer cosigned construction loans for his son. Appellant did, however, subordinate his interest in one of the model homes to Security Federal Savings and Loan Association's claim for $70,000. (In the end, appellant's interest in the two model homes was possibly under-secured. The subordinated interest on Sublot 13 Hallmark Manor subdivision home was sold for $95,000 minus Security Federal's $70,000 priority interest, leaving on $25,000 to secure appellant's interest.. However, there was evidence that by February the debt was reduced to $67,000 and a model home was almost completed on the second lot securing appellant's interest.)

After the February 6, 1988 meeting, appellee continued to supply additional materials to the corporation in the amount of $49,158.56. In March 1988, appellant's son left town with his family and their whereabouts are unknown. (It appears that the trial court placed a great emphasis on a phone conversation, occurring at this time, between Mr. Sanderson and appellant's wife, in which she allegedly reiterates a guarantee of the son's business. However, the questioner withdrew those questions concerning this fact. Furthermore, this court would seriously question the wife's ability to personally bind her husband to such a guarantee.)

Appellee then filed mechanic's liens against the corporation's projects for the balance owed. These filings named only appellant's son, Reed Victor, as the debtor. At the same time, appellant took control of the projects under construction and the liquidation of the corporation's assets. There remained an outstanding balance due with appellee of $111,365.71.

Appellee brought suit, naming appellant as a party and alleging that he had personally guaranteed the payment of the corporation's account with appellee. The trial court found that the "leading object" of the promise was appellant's own pecuniary interest (based on the corporation's indebtedness to appellant and appellant's liability as cosignor on many of the corporation's loans and removed the oral promise to answer for his son's debts from the statute of frauds), thereby finding appellant jointly and several[642]*642ly liable to appellee for damages in the amount of $111,365.71.

It is from this judgment that appellant timely appeals raising the following assignments of error:

"1. The trial court erred in ruling that defendant, Ralph Victor, had (1) made a personal guarantee to pay the debt of Reed Victor to Mentor Lumber and Supply Co., and (2) that he agreed to become primarily liable on the account.

"2. The trial court erred in failing to grant defendant's motion for directed verdict at the close of plaintiffs case and in granting judgment for plaintiff at the conclusion of the case, as plaintiff had failed to establish the requirements of the 'leading object rule.'

"3. The trial court erred in granting judgment in favor of the plaintiff for amounts due on Reed Victor's account prior to the alleged promise of Ralph Victor on February 6, 1988."

In his first assignment of error, appellant contends that the trial court erred in removing the oral guarantee from the protection of the statute of frauds because the promise was not unequivocal. Appellant's position is that the language "stand behind" his son's account is subject to more than one interpretation; therefore, the promise is not unequivocal and deserves the protection of the statute of frauds.

Appellant cites Continental Supply Inc. v. Wilson Covey d.b.a Covey Plumbing (Jan. 13, 1986), Warren App. No. CA85-06-036, unreported, which stated that the trial court found no unequivocal promise to answer for another's debt, and, therefore, the promise came under the protection of the statute of frauds.

This court agrees with appellant's contention that something less than an unequivocal promise was made to appellee. Appellee admits that "stand behind" could have meant only that Ralph Victor would help his son with the business and that appellant would see to it that projects were finished.

There were notations made at these meetings when the promise to "stand behind" Reed Victor, Inc. was made. However, a guarantee is not mentioned in these notations. Finally, appellee's general manager, who knew that a writing was required, stated that he told appellant that a handshake would be good enough and that no writing was needed.

No unequivocal promise to answer for the debt of another was made and, therefore, the requirements of the statute of frauds must be met before such a "guarantee" will be enforced against the promisor. As such, appellant's first assignment of error is with merit.

In his second assignment of error, appellant contends the trial court erred in denying appellant's motion at the close of appellee's case, and that the trial court erred in finding for the appellee, as appellee failed to establish the "leading object" of appellant's promise.

Appellee correctly argues that appellant's motion for a directed verdict should properly be entitled a motion for involuntary dismissal under Civ. R. 41(B)(2). See Lentino v. Fringe Emp. Plans, Inc. (C.A. 3, 1979), 611 F. 2d 474. Appellee then relies upon Helmick v. Republic-Franklin Ins. Co. (1988), 39 Ohio St. 3d 71, for the proposition that appellant having failed to renew his motion at the end of the trial any error has been waived by appellant. Helmick, supra, deals with a motion for directed verdict in a jury trial and is inapplicable. It has been already stated that appellant's motion should be considered a motion for involuntary dismissal under Civ. R. 41(B)(2).

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8 Ohio App. Unrep. 640, Counsel Stack Legal Research, https://law.counselstack.com/opinion/mentor-lumber-supply-co-v-victor-ohioctapp-1990.